Use Simple Tests To Improve Direct Mail Response Rates - By: Dan ODonnell

Take the guess-work out of your direct mail response rates. Start with a few simple tests to determine the best approach for your audience and then roll-out your results to larger campaigns.

There are many ways to test your direct mail, but one tried and true approach is to keep it simple. Choose just one variable. Test the variable. Variables include things like your offer, content, list source, and package design.

An Example

Testing the type of direct mail package answers the following questions:

What type of direct mail package provides responses at the most efficient cost? Should it be a letter package or self-mailer?

Let’s assume you are a nonprofit organization attempting to increase donations. The letter package is typically more expensive, the self-mailer, usually lower in cost. Can you spend less and acquire the same or higher level of donations with a self-mailer? To find out, initiate your test with these steps:

First, a few assumptions for this example - you have a test list of 10,000 names and addresses.

Contents of your Letter Package include :

8-1/2 x 14” personalized letter with a tear-off coupon

Brochure

Reply Envelope

Outer Envelope

Contents of your Selfmailer include:

A trifold brochure with tear-off reply card

Step 1 - Calculate the costs of each package.

We’re going to produce both packages at a quantity of 5,000. Each package will have the same expense categories. List the category and calculate the costs:

Design and writing

List

Printing

Lettershop/Mailing

Postage

For this example, assume a cost of $6,000 for the letter package, $4,000 for the self-mailer.

Step 2 - Develop the creative/offer.

Write your content

Work with your designer to develop the creative approach

Apply the creative to both packages, keeping the message the same on both packages. Yes, of course you’ll be able to expand the message on the letter package since you’ll have lots more space to add content, that’s okay.

Step 3 - Include ways to track responses

The most simplistic tracking method is to use a small preprinted code on the reply device of each piece. For our example the letter package will have a code LTR-1, the selfmailer will be SLF-1.

Ensure that your list is divided into equal segments. It’s not just the quantity that should be equal - the quality of the names on the list should be equal too. In other words, don’t pull 5,000 known high-end donors for the letter and 5,000 average donors to the selfmailer. Mix them up to make a homogenous group and then divide them into 2 files.

Mail the 2 packages at the same time. No delays between the mailings.

Count all of the returns. Quantify the number of returns segmented by the letter package and selfmailer code. Responses received via mail are easy to count, if you accept phone donations, have your phone reps ask for the code on their mailer. If you direct donors to your website, ask for the code on the web form.

Step 4 - Analyze costs and returns

Quantify the total return for each campaign in dollars - Call this “Income.”

Quantify the number of responses for each campaign - Call this “Donors”

We know the quantity of pieces mailed, 5,000 each campaign - call this “Quantity.”

We also know the cost for each mailing. We’ll call them “Letter Cost” ($6,000) and “Selfmailer Cost” ($4,000).

More assumptions. Your responses will certainly vary from these, but it’s common to receive fewer responses from a selfmailer, so I’ve used the following:

You’ve received 250 Donors from the letter package. Income $12,500.

You’ve received 200 Donors from the selfmailer. Income $10,000.

Income minus Cost = Net income.

Net income from the letter package is $6,500 ($12,500 - $6,000)

Net income from the selfmailer package is $6,000 ($10,000 - $4,000)

In this example, even though the cost of the letter package is 50% higher, the return pays for the higher expense. In the roll-out stage, using the numbers above, you could estimate that a mailing of 50,000 pieces, as a letter package, would return $5,000 more Net Income than the selfmailer. As a side note, the income would be even higher since the roll-out costs per thousand pieces mailed would be far lower than the test mailing.

About the Author

There are many other ways to test your direct mail variables and to quantify response rates. For answers about testing other variables, visit our website, contact directmailanswers@direct-axis.net or phone toll-free, 800-849-3056.

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